19 November 2015
Stability and benefits to wider economy, get ready for ELTIFs
Luxembourg ready for European long-term investment funds
On 20 April 2015 the council of the European Union agreed to adopt a regulation
that would provide for a new kind of fund vehicle for the creation of increased capital for
long-term investment in the EU economy.
These so-called European long-term investment funds (ELTIFs) provide an
opportunity for certain types of investors to find stability and profitability through the
utilisation of an economy-boosting regulation designed to benefit all.
This is because as well as benefiting investors it is thought that European
long-term investment funds will help bolster investment in vital infrastructure projects,
creating jobs and enhancing Europe-wide economic prosperity.
However, these funds are not likely to be for everyone; they are alternative
investments that require a particular kind of investor who is looking to commit long term in
exchange for capital appreciation vs stable returns. There will also be numerous additional
rules for ELTIFs; for example, at least 70% of capital must be invested in certain asset
categories, while non-long-term asset investment will be restricted to a maximum of 30% of
capital.
Furthermore, only alternative investment funds managed by specialist fund
managers (AIFM as defined by directive 2011/61/EU) will be able to be styled as ELTIFs.
The move to establish ELTIFs forms part of the Europe 2020 Strategy, which aims
to place Europe on a path towards a "smart, sustainable and inclusive economy".
The ELTIF Regulation will become directly applicable to Luxembourg law from 9
December 2015 without the need for any further regulatory, legal or statutory procedures.
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